What is Wrapped Bitcoin?
Wrapped Bitcoin (WBTC) is a cryptocurrency token that allows the holders of Bitcoin to perform transactions on an Ethereum-based blockchain network. It reflects the value of Bitcoin (BTC) and can interoperate with decentralized applications built on the Ethereum network. Wrapped Bitcoin was launched in 2019, and it tracks the real value of Bitcoin, which shows that it has a direct relation with Bitcoin.
Ethereum and Bitcoin are both built on different protocols. That’s why the blockchain on which they perform cannot communicate with each other. The wrapped Bitcoin is created as a solution to the problems of all other wrapped cryptocurrencies. This will allow BTC holders to โwrapโ Bitcoin and create tokens compatible with the Ethereum protocol that can be used in communication and transactions with other blockchains.
Who created Wrapped Bitcoin?
On the Ethereum mainnet, wrapped bitcoin was introduced in Jan 2019. Wrapped Bitcoin was born as a collaborative effort between major users in the DeFi ecosystem, such as Dharma, BitGo, Ren, Kyber, MakerDAO, Compound, and Set Protocol. A decentralized autonomous organization currently manages this project (DAO) called WBTC DAO.
How does Wrapped Bitcoin work?
Wrapped Bitcoin on the Ethereum blockchain allows smart contracts and applications to interact with cryptocurrency, which is backed with real Bitcoin. It stores the Bitcoin in a digital wallet, where users exchange BTC for wBTC, and then freshly minted wrapped bitcoin is released to the users. Users can redeem the BTC to wrapped bitcoin on one to one basis, and whenever the user wants can wrap or unwrap the BTC. Every time check the wrap or unwrap fees before making transactions because it charges a small fee.
Essentially, “wrapping” Bitcoin or any other cryptocurrency means making it compatible with other ERC-20 tokens running on the Ethereum blockchain network.
How to buy Wrapped Bitcoin
You can buy wBTC using Bybit, a platform where you can easily buy, sell, and trade your wBTC securely. There are several ways to buy wrapped bitcoins:
1. Account created
if you are a new user, you must make an account on Bybit and verify your account by KYC.
Coin-Labs signed an agreement in 2021 to become the official business partner of Bybit.
Therefore, when you sign up for Bybit through the Coin-Labs website, you will be able to experience Korea’s top commission benefits and also become eligible to participate in an event to receive up to $600 in bonuses.
2. Buy with Debit/Credit Card
Go to the Bybit website and sign in with your account. After login, buys any stablecoin or BTC using your Debit or credit card. On Bybit spot, trade the coin which you have purchased for wBTC.
3. Buy with P2P trading
On Bybit, you can use the peer-to-peer trading option. In P2P trading, choose the advertiser with your coin and proceed with the payment process. When the seller releases the coins, they will show in your asset wallet. You can buy wBTC by using your coins.
4. Trade wBTC
if you have other ERC-20 Compatible cryptocurrencies, you can trade them for wBTC tokens.
5. Convert bitcoin you own
if you own a bitcoin, you can swap it for wBTC. However, you have to pay the exchange fee, which will be a small fee for the wrapping process.
Wrapped Bitcoin Comparison
1. Wrapped Bitcoin vs Bitcoin
There is a similar relationship between wrapped bitcoin and Bitcoin as between the U.S. dollar and Tether (USDT). The USDT has the same value as the U.S. dollar. The only difference is that the U.S. dollar is the national currency of the united states, which is offered by the government Treasury department and cannot be used as a cryptocurrency transaction. At the same time, USDT is the crypto version of fiat stablecoin, which can be used on the blockchain.
The same thing is for Bitcoin and Wrapped Bitcoin, which everyone knows. Both are used for making cryptos transactions. However, the wrapped bitcoin has importance in cross-chain functionality it provides the holders of bitcoin. Suppose the Bitcoin holders want to deposit in the DeFi platform (for example, Aave). They have to use Wrapped Bitcoin because you can use AAVE coin only on the Ethereum network. WBTC are ERC-20 tokens. In this way, the wBTC can be used on Ethereum.
2. Wrapped Bitcoin vs Bitcoin cash
Wrapped Bitcoin (WBTC) is a different cryptocurrency asset, so it cannot be mixed up with bitcoin cash. However, its value is linked with BTC. It’s an ERC-20 token which means the platform has a link with the world of DeFi apps and smart contracts. Wrapped bitcoin keeps a 1:1 backing with bitcoin. Therefore, WBTC takes BCH to a more advanced blockchain network.
BTC miners developed Bitcoin cash. While it makes faster transactions and is cost-friendly, it has up to 32MB of block size. Bitcoin cash was created in 2017 after a hard fork. According to the experts, a larger block size of BCH can have a security threat issue. However, both WBTC and BCH are altcoins.
Comparison table of 3 cryptocurrencies
Here we are going to compare the wrapped bitcoin, bitcoin and bitcoin cash according to coinbase market stats in detail:
| Names | Wrapped bitcoin(wBTC) | Bitcoin(BTC) | Bitcoin cash(BCH) |
| Summary | Wrapped bitcoin has lost its value by 0.39% in the last week. 89.71% is down its overall time value. | Bitcoin is on the bottom this week. While it has lost about 0.75% value in the last 7 days, its current price is $16,713.08/BTC. BTC is below 75.73% from an all-time high of $68,789.63. | In the last 7 days, the price of BCH has been down by 3.22%. And its price increased by 0.60% during the previous 24 hr. The current price is $99.59/BCH. |
| MARKET CAP | $3.1B | $321.8B | $1.9B |
| PRICE CHANGE (7D) | -0.39% | -0.75% | -3.22% |
| PRICE CHANGE (24H) | +0.13% | +0.05% | +0.6% |
| VOLUME (24H) | $36.8M | $11.8B | $100.8M |
| POPULARITY | #16 | #1 | #21 |
| CIRCULATING SUPPLY | 183.1k wBTC | 19.4M BTC | 19.4M BCH |
| ALL-TIME HIGH | $162,188.26 | $68,789.63 | $4,355.62 |
| TYPICAL HOLD TIME | 4 days | 145 days | 54 days |
| PRICE CHANGE (1H) | -0.07% | -0.02% | -0.16% |
Price Prediction of the crypto (2025 / 2030)
There are many things to be done for the progressive approach of wrapped bitcoin toward transparency. Based on the previous historical data and wBTC price predictions, experts have different investment suggestions to share. The price forecasters gave the long-term WBTC price predictions:
- Wallet Investor: they have optimistic wrapped bitcoin prediction. According to them, the price could go up to $63,401 by the end of 2022 and reach up to $154,791 by the end of 2025. A five-year estimate for the WBTC/USD suggests it could reach $187,182 in January 2027.
- Digital coin: However, digital coin has a more stable price prediction for the wrapped bitcoin. According to their estimation, the average price could go up to $50,510 by the end of 2022 and reach up to $57,533 in 2023, and in 2025 it can go up to $73,278, and in 2029 it will be about $154,555.
Price predictions:
according to them, the average price can go up to $55,066 of wBTC in 2022, and in 2025 it will be near about $175,557, and in 2030 it could reach $1,041,712.
Remember that this prediction can be wrong when we look at the price prediction according to the crypto adviser. All the above predictions are based on technical and fundamental studies of the past performance of cryptocurrency, which has no guarantee of the future. Before investing in any crypto project, it is necessary to do your research and always trade the number of assets with which you can bear the risk. Please don’t invest assets you cannot pay to lose.
Is Wrapped Bitcoin a Good Investment?
In the cryptos world, wrapped bitcoin is considered a good investment because DeFi plays a significant role. Since the last year, a total of $800M Bitcoin was exchanged into WBTC. From this, you can get an idea of the current market capitalization of wBTC.
It offers many advantages like Ethereum blockchain support, yield farming, liquidity and scalability etc., wBTC increases the capital efficiency and liquidity for both decentralized and centralized exchanges, and this is because assets can be moved between multiple chains that would otherwise remain separate. On the other hand, it charges lower fees and fast transactions than WBTC offers and is beneficial for blockchains like Ethereum or Bitcoin.
Compared to other assets, wrapped bitcoin offers fractionalized ownership, allowing users to buy or hold a small fraction of the asset.
Is Wrapped Bitcoin safe?
According to the technical viewpoint, a wBTC is safe. It will likely be held on a secure platform such as Binance Smart Chain or Ethereum. When converted to BEP-20 or ERC-20 token, it will maintain the security of the associated network.
The only major flaw in the wBTC token is to trust the custodian that maintains or holds the asset. If a custodian unlocks a real bitcoin and releases it to someone else, it leaves token holders in ERC-20 appropriately wrapped BTC with a meaningless asset.
How it holds your Bitcoin determines the level of security it offers. A centralized custodial network which holds the bitcoin is an organization that commits to creating ERC-20 tokens on Ethereum, as an example. The centralized entity will stay with your BTC. We should trust them. You have to ensure that the organizations are backed up by insurance and guarantee just in case something happens.
